SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995
Commission File Number 0-4431
AUTO-GRAPHICS, INC.
(exact name of registrant as specified in its charter)
California 95-2105641
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3201 Temple Avenue, Pomona, California 91768
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:
(909) 595-7204
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X] No [ ]
Total Shares Outstanding:
Common Stock: 1,130,478
AUTO-GRAPHICS, INC.
Form 10-Q
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Condensed Statement of Income
For Six Months Ended June 30
1995 1994
Net sales $4,523,075 $4,342,443
Costs and expenses:
Cost of sales 2,873,283 2,988,730
Selling, general & administrative 1,458,984 1,191,658
Interest/other 81,814 72,047
Total costs and expenses 4,414,081 4,252,435
Income from operations 108,994 90,008
Provision for taxes based on income 50,000 38,000
Net income/(loss) $ 58,994 $ 52,008
Net income/(loss) per share $ .05 $ .04
Shares outstanding 1,130,478 1,285,278
<FN>
See Notes to Unaudited Condensed Financial Statements
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Condensed Statement of Income
For Three Months Ended June 30
1995 1994
Net sales $2,331,364 $2,395,229
Costs and expenses:
Cost of sales 1,480,528 1,695,731
Selling, general & administrative 754,519 613,789
Interest/other 41,489 39,529
Total costs and expenses 2,276,536 2,349,049
Income from operations 54,828 46,180
Provision for taxes based on income 25,000 19,000
Net income $ 29,828 $ 27,180
Net income per share $ .03 $ .02
Shares outstanding 1,130,478 1,285,278
<FN>
See Notes to Unaudited Condensed Financial Statements
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Balance Sheet
June 30, 1995 and December 31, 1994
ASSETS
CURRENT ASSETS 1995 1994
(Audited)
Cash $ 51,836 $ 80,852
Accounts receivable, less
allowance for doubtful
accounts of $38,000 in
1995 and 1994 1,611,013 2,051,764
Unbilled production costs 354,093 217,111
Finished goods 83,732 55,189
Prepaid expenses and other 234,352 198,040
Total current assets 2,335,026 2,602,956
EQUIPMENT & LEASEHOLD IMPROVEMENTS,
at cost 7,174,949 6,645,125
Less accumulated depreciation 3,789,075 3,338,152
Net equipment & leasehold
improvements 3,385,874 3,306,973
OTHER ASSETS 226,747 196,187
$5,947,647 $6,106,116
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 305,000 $ --
Accounts payable 299,493 291,166
Customers' advance payments 228,397 328,413
Accrued expenses 93,781 166,823
Accrued payroll & related
liabilities 149,536 135,675
Current portion of long-term debt 505,000 450,000
Total current liabilities 1,581,207 1,372,077
LONG-TERM DEBT 1,580,881 1,695,881
DEFERRED TAXES BASED ON INCOME 478,932 487,432
STOCKHOLDER'S EQUITY
Common stock, $.10 par value;
4,000,000 shares authorized,
1,130,478 shares issued and
outstanding in 1995, and
1,285,278 in 1994 113,048 128,008
Capital in excess of par value 1,151,093 1,197,717
Retained earnings 1,042,486 1,225,001
Total stockholders' equity 2,306,627 2,550,726
$5,947,647 $6,106,116
<FN>
See Notes to Unaudited Condensed Financial Statements
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Statements of
Cash Flows
For the Six Months Ended June 30
1995 1994
Cash flows from operating activities:
Net income $ 58,994 $ 52,009
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 468,923 448,906
Provision for losses on
accounts receivable -- --
(Increase) decrease in accounts
receivable 440,751 142,173
(Increase) decrease in unbilled
production costs (136,982) (125,736)
(Increase) decrease in finished
goods inventory (28,543) (32,130)
(Increase) decrease in other
current assets (36,312) (98,653)
(Increase) decrease in other assets (48,560) 58,214
Increase (decrease) in accounts
payable 8,328 (156,071)
Increase (decrease) in customer
advances (100,016) (87,245)
Increase (decrease) in accrued
expenses (80,955) (2,562)
Increase (decrease) in accrued payroll
and related liabilities 13,861 (50,250)
Increase (decrease) in interest and
income taxes payable 7,913 (41,662)
Increase (decrease) in deferred taxes (8,500) --
Net cash provided by operating
activities $ 558,902 $ 106,993
Cash flows from investing activities:
Capital expenditures (529,824) (548,584)
Net cash used in investing $ (529,824) $ (548,584)
activities
Cash flows from financing activities:
Borrowings under long-term debt 165,000 --
Principal payments under debt
agreements (225,000) (225,000)
Net borrowings (payments) under
line-of-credit agreement 305,000 695,000
Repurchase of capital stock (303,094) (39,176)
Net cash provided by (used in)
financing activities (58,094) 430,824
Net increase (decrease) in cash (29,016) (10,767)
Cash at beginning of period 80,852 63,079
Cash at end of period $ 51,836 $ 52,312
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 106,642 $ 90,800
Income taxes 50,600 73,600
<FN>
See Notes to Unaudited Condensed Financial Statements.
AUTO-GRAPHICS, INC.
Form 10-Q
Notes to
Unaudited Condensed Financial Statements
June 30, 1995
NOTE 1.The unaudited condensed financial statements included
herein have been prepared by Registrant and include all
normal and recurring adjustments which are, in the
opinion of Management, necessary for a fair presentation
of the financial position at June 30, 1995, the results
of operations and the statement of cash flows for the six
months ended June 30, 1995 and 1994 pursuant to the rules
and regulations of the Securities and Exchange
Commission.
The results of operations for the subject periods are not
necessarily indicative of the results for the entire
year.
This Quarterly Report on Form 10-Q is qualified in its
entirety by the information included in the Company's
Annual Report to the SEC on Form 10-K for the period
ending December 31, 1994 including, without limitation,
the financial statements included therein.
NOTE 2.In November 1992, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standard
No. 112, Employers Accounting for Postemployment
Benefits, which the Company adopted in 1994. The
Standard requires that the cost of certain post-
employment benefits programs be accrued as of the date of
termination. The adoption of the Standard has not had a
material effect on the Company's financial position or
results of operations.
In December 1993, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standard
No. 115, Accounting for Certain Investments in Debt and
Equity Securities, which the Company adopted in 1994.
The standard establishes principles of financial
accounting and reporting for investments in equity
securities that have readily determinable fair values and
for all investments in debt securities. The Company has
no current or planned investments in debt or equity
securities for which the Standard is applicable,
therefore the Standard has not had a material effect on
the Company's financial position or results of
operations.
NOTE 3.The Company entered into a stock repurchase agreement with a
former employee and officer of the Company, Douglas K. Bisch,
whereby the Company agreed to purchase and retire, over a
seven-year period, 156,000 of 171,000 shares of Company stock
owned by Mr. Bisch. The total transaction cost of $825,000
includes stock, non-competition and consulting fees. In
January 1995, the Company purchased and retired the first
block of 15,600 shares.
NOTE 4.In June, 1995, the Company entered into a stock
repurchase agreement with a former employee and officer
of the Company, Cary A. Marshall, whereby the Company
agreed to purchase and retire, in 1995, 115,000 of
141,000 shares of Company stock owned by Mr. Marshall.
The total transaction cost of $230,000 will be paid in
four annual installments beginning in 1995 plus interest
of 5.5% per annum ($65,000 paid in June 1995, and $55,000
to be paid in 1996,1997 and 1998).
AUTO-GRAPHICS, INC.
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
December 31, 1994 to June 30, 1995
Liquidity and capital resources. Working capital decreased
$477,000 due to improved receivable collections and stock
repurchase. Long-term debt was reduced by $115,000. Capital
expenditures were $530,000. The average collection period for
accounts receivable improved from 70 days at December 31, 1994 to
62 days as of June 30, 1995.
The Company has negotiated a new revolving credit agreement
with a bank under which borrowings are secured by accounts
receivable, whereby the Company may borrow against its eligible
accounts receivable up to a maximum of $1,000,000 ($695,000
available at June 30, 1995) with interest at 1/2% above the
bank's prime rate. Management believes that the current line of
credit, which is renewed annually in May, will again be renewed
in 1996, and is sufficient to handle cyclical working capital
needs. There are no compensating balance requirements or
commitment fees. This agreement contains the same loan covenants
as the equipment line of credit note payable.
The Company also has a line of credit agreement with the bank
providing for maximum borrowings of $2,250,000 ($329,000
available at June 30, 1995) for the purchase of capital and
financing of up to $500,000 in internal software development
costs. The capital line of credit is renewed annually in May and
management believes that the current line of credit will be
renewed in 1996. Management does not currently believe that
increased credit will be required to finance capital improvements
in 1995 which are currently estimated at $900,000. Among other
requirements, the capital line of credit note payable requires
the Company to maintain minimum ratios of current assets to
current liabilities, debt to equity and cash flow to debt
service, minimum working capital and equity amounts, limits
capital expenditures and capital lease obligations and prohibits
the payment of cash dividends. There are no commitment fees or
compensatory balance requirements.
RESULTS OF OPERATIONS
First Six Months 1995 as Compared to First Six Months 1994
Net sales increased $181,000 or 4% to $4,523,000.
Cost of sales decreased $115,000 or 4%. Significant
factors in cost of sales include changes in operating costs
generally attributable to variable costs fluctuating with product
mix.
Selling, general and administrative expenses increased
$267,000 or 22% as a result of the company's focus on sales and
marketing. The primary increases are in additional sales and
marketing staff, and marketing expenses. As a percentage of
sales, these expenses increased from 27% to 32%.
Interest expense/other increased $9,800 or 14% primarily as a
result of higher interest rates on borrowings in 1995.
Income from operations increased $19,000 or 21% to $109,000
in 1995.
Net income increased $7,000 to $59,000 net profit in 1995, up
from a $52,000 net profit in 1994.
Net income per share increased from $0.04 per share in 1994
to $0.05 per share in 1995 due to a reduction in the number of
shares outstanding.
RESULTS OF OPERATIONS (continued)
Second Quarter 1995 as Compared to Second Quarter 1994
Net sales decreased $64,000 or 3% to $2,331,000.
Cost of sales decreased $215,000 or 13%. Significant factors
in cost of sales include changes in operating costs generally
attributable to variable costs fluctuating with product mix.
Selling, general and administrative expenses increased
$141,000 or 23%. As a percentage of sales, these expenses
increased from 26% in 1994 to 32% in 1995.
Interest expense/other increased $2,000 as a result of higher
interest rates on borrowings in 1995.
Income from operations increased $9,000 to $55,000 in 1995.
Net income increased $3,000 to $30,000 in 1995.
AUTO-GRAPHICS, INC.
Form 10-Q
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits: None
b. The Company filed Form 8-K on April 28, 1995
covering exhibits to the Form 10-K report for the
year ended December 31, 1994. These exhibits were
separated from the 10-K prior to the filing thereof
and were subsequently refiled during the period
covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
AUTO-GRAPHICS, INC.
Date 8/14/95 Robert S. Cope
Robert S. Cope, President
and Treasurer
Date 8/14/95 Daniel E. Luebben
Daniel E. Luebben, Controller